Power prices to increase by 6pc

Up to 17,000 King Country Energy customers will be hit by a 6 per cent increase to their power bills from April 1, the company citing rising wholesale electricity prices as the cause.

The company is increasing retail prices for domestic, farming and commercial customers who are based across the central North Island between Otorohanga and Waiouru.

The increase is the second in five months – the company increased prices by 4 per cent in October.

King Country Energy chief executive Rob Foster said about 2000 larger customers on contracts would not be effected.

While the rise will equate to a $5 a month rise for the average domestic customer, King Country Energy is promising an 18-month price freeze for those customers afterwards.

Mr Foster said the company had done everything it could to keep costs down but the rising cost of buying wholesale electricity was the main driver of the price rise.

"King Country Energy generates around 47 per cent of the total amount of electricity our customers demand. The remaining 53 per cent we purchase from the wholesale electricity market," Mr Foster said.

Electricity generators were facing increased costs for resource consents and the cost of constructing new generation plants. That was contributing to an average rise in wholesale prices of about 6 per cent each year, but over the past six years King Country Energy's electricity retail prices had only risen 2 per cent each year on average.

"Unfortunately these costs are beyond our control," Mr Foster said.

He said the company had hedged its external electricity needs for the next 18 months and hoped the price freeze would provide some surety for customers in the medium term.

"From April 1, we are guaranteeing we will not raise electricity retail prices for our domestic, farming and commercial customers for a minimum of 18 months," he said.

"It is our hope that this freeze will give our customers some certainty that allows them to budget for their electricity retail expenses in the medium term."

Beyond that time it was difficult to know what the market would do, he said.

Mr Foster also said the April 1 price rise had nothing to do with a realignment of tariffs between different customer groups. "The price rise is solely due to the rise in wholesale electricity prices and now needing to pass this expense on to customers."

The company reported a $1.4 million surplus last year but this was 70 per cent down on a $4.7m surplus reported in 2008.

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